The Swiss National Bank (SNB) is widely expected to lower its benchmark interest rate by 25 basis points to 0.25% at its policy meeting on Thursday, March 20. A majority of economists surveyed by Reuters predict that the central bank will continue its easing cycle, with rates likely to remain at this level until at least 2026. The decision follows a surprise 50-basis-point cut in December and comes against a backdrop of subdued inflation, a strong Swiss franc, and an uncertain global economic outlook.
Inflation in Switzerland remains well within the SNB’s target range of 0-2%, reaching just 0.3% in February—its lowest level in nearly four years. With price pressures cooling, the central bank appears to have room for further monetary easing. However, concerns over the Swiss franc’s strength persist, as its high valuation has weighed on exporters, particularly in industries like watchmaking. The SNB may seek to offset this pressure through both rate cuts and potential interventions in the foreign exchange market.
Despite market consensus pointing to a 25-basis-point cut, some analysts suggest a more cautious stance is possible. UBS economists have described the decision as a “coin toss,” citing resilient Swiss economic growth and lingering uncertainty over global trade. The prospect of escalating tariffs under a potential second Trump presidency adds another layer of complexity, as Swiss exporters—especially in pharmaceuticals—could face new trade barriers. Additionally, rising optimism around eurozone growth, fueled by expected infrastructure and defense spending in Germany, has strengthened the euro, further complicating currency dynamics for the SNB.
Markets are pricing in further easing by the European Central Bank later this year, and investors remain watchful for any signals from the SNB regarding future rate cuts or intervention in the currency markets. While a 25-basis-point cut appears the most likely outcome, the SNB’s history of surprising markets means that investors will be paying close attention to the central bank’s policy statement and forward guidance for clues on the path ahead.
This article was written by Eamonn Sheridan at www.forexlive.com.